A Keynesian put is named after the economist John Maynard Keynes, who famously proposed government intervention to offset periods of economic contraction. Keynes argued that during periods of depressed economic activity, governments should intervene to increase aggregate demand, stimulate private sector investments and support employment.

The term “Keynesian put” is being used to describe the expectation of a stimulus package from the government when the economy is weak. The Keynesian put suggests that governments have an obligation to step in and help stimulate the economy in the event of weak economic growth or a possible recession.

In the case of the Keynesian put, investors are betting on the government taking action to stimulate the economy through fiscal policy changes. Such policies could include infrastructure spending, tax cuts, quantitative easing (printing new money), and other government spending initiatives. Investors are also betting on the expectation that the added stimulus would result in improved economic conditions, higher stock markets, higher consumption and stronger growth in the future.

The idea of a Keynesian put has gained traction as governments around the world have moved to inject more money into their economies in response to the coronavirus pandemic. Governments have implemented unprecedented fiscal stimulus packages in order to prop up businesses, support employment and stimulate growth. Such examples of fiscal stimulus include direct cash payments to households, business loans, tax cuts and expansions of unemployment benefits.

Government intervention of this nature can be seen as a Keynesian put. Investors are betting that government spending will create a ‘put option’ on the stock market, helping to prop up markets and provide a cushion against downside risks. In some ways, this strategy has also been seen in the recent stock market rally, as investors have taken to investing on expectations of fiscal stimulus and stronger economic growth in the future.

Overall, a Keynesian put is a bet that anticipates a government policy change that will not just boost the economy in general, but certain investments specifically. It is an investment strategy which is often used as a hedge against downturns, by providing some level of protection against the risk of an economic downturn or market crash.